BP Sells Canada Gas Assets to Plains Pipelines for $1.7 Billion
By Brian Swint and Matthew Campbell
Dec. 1 (Bloomberg) — BP Plc agreed to sell its natural-gas liquids business in Canada to Plains All American Pipeline LP for $1.67 billion in cash.
The business includes 4,000 kilometers (2,500 miles) of pipelines,21 million barrels of storage capacity and fractionation plants in Sarnia, Ontario, and Fort Saskatchewan and Empress. BP began seeking a buyer for the Canadian assets in March. Completion is expected in the first half of 2012, BP said in a statement today.The sale brings BP closer to its goal of raising almost $40 billion through asset sales to help compensate for last year’s Gulf of Mexico spill, the worst in U.S. history. Chief Executive Officer Robert Dudley has overseen divestitures in Venezuela, Vietnam and the U.S. since taking over from Tony Hayward more than a year ago.
The acquisition allows Houston-based Plains to add to its 16,000 miles of pipelines. Chairman and Chief Executive Officer Greg L. Armstrong, went hostile with a $1 billion cash bid for rival pipeline owner SemGroup Corp. in October, an offer SemGroup’s board rejected again last month.
The company, organized as a publicly listed master limited partnership, raised about $386 million in a unit offering last month, after Armstrong said on a third-quarter earnings conference call on Nov. 3 that the company would pursue up to $625 million in deals.
BP Plants
BP’s assets in the U.S. and Canada produce 48 percent of all natural gas liquids in the world, according to the company’s website. The London-based oil producer extracts natural gas in western Canada, and processes it there and in southern Ontario. BP’s Empress plant, one of the largest in North America, can process up to 4.6 billion cubic feet per day.
Natural-gas liquids such as ethane, butane and propane are derived from the raw, methane-heavy gas produced at drilling sites. Fractionation distills the different hydrocarbons found in natural gas into separate products more valuable than the mix.
BP sold other Canadian gas assets as part of a $7 billion deal with Apache Corp. last year. The company is also getting rid of half its U.S. refining capacity, including plants in Texas City, Texas, and Carson, California. It plans to complete the refinery sales by the end 2012.
The Gulf of Mexico spill left BP with a bill projected to reach $40 billion, and led to Hayward’s resignation. In July, a year after BP capped the flow, the U.S. government estimated that about 491 miles of coastline from Louisiana to Florida were contaminated by BP oil. The disaster killed 11 people, hurt 17, destroyed Transocean Ltd.’s $365 million Deepwater Horizon drilling rig and closed thousands of square miles of fishing grounds for months.
–With assistance from Zachary R. Mider in New York. Editors: Will Kennedy, Stephen Cunningham
To contact the reporters on this story: Brian Swint in London at bswint@bloomberg.net; Matthew Campbell in Paris at mcampbell39@bloomberg.net
To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net; Jacqueline Simmons at jackiem@bloomberg.net
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